The prices of secondary materials are declining and costs for recyclers are increasing, the Recycling Association (RA) has warned.
The trade body says market conditions for the waste industry are deteriorating and the sector has not seen the same signs of recovery as the rest of the UK economy.
RA president Adrian Jackson said this was in part due to weaker demand for recyclate from China and other Asian markets, which traditionally have been the main importers of secondary materials from the UK.
He noted prices for recovered paper had fallen in November and were expected to decline further in the run-up to the winter holidays.
“I can envisage a situation where a lot of mills will close earlier than normal and use downtime in order to take finished stock out of production,” Jackson said.
Prices for domestic mixed-paper have declined from a range of £50-55 per tonne at the end of September to £35-55 in mid-November, according to MRW data. Export prices dropped from £55-70 per tonne to £50-60.
Finnish paper maker UPM has recently announced it will be shutting down a newsprint machine in the UK following what it described as “overcapacity” in the European paper market.
“The current operating rates are unacceptably low and the current economic environment is not promising tailwind for 2015,” said Jussi Pesonen, president and chief executive at UPM.
The outlook was negative also for other materials, according to Jackson, with a “tremendous downward pressure” on the prices of waste plastics on the back of falling oil prices.
Simon Ellin, chief executive at the Recycling Association, said the decline was taking place against the background of higher costs for recyclers.
“We are seeing increases in business rates, insurance, labour and red tape, site licensing and general compliance.
“There is simply not the revenue rebates to be gained from the sale of recyclables that there were even 12 – 24 months ago.”
Ellin encouraged local authorities to assist recyclers operating in challenging market conditions.
“The collection and processing of recyclables has to be sustainable and a partnership approach must be adopted which reflects the true costs of the whole recovery system.
“We urge a sensible and pragmatic approach from waste producers to assist in sharing the burden in the difficult times as well as benefitting in the good times.